Move to continue freeze on assets of crypto developer
The Ontario Securities Commission has applied to a court for the continuation of a freeze on certain assets controlled by Troy Hogg, a founding figure of Bermuda-registered cryptocurrency exchange and mining company Arbitrade Ltd.
The Commission is investigating potential contraventions of Canada’s Securities Act by Mr Hogg, the Ontario corporations Cryptobontix Inc and Arbitrade Exchange Inc, and other related parties.
The OSC issued a notice of application to the Ontario Superior Court of Justice, where it seeks to have freeze directions it issued in November continued. The notice lists as respondents Mr Hogg, Cryptobontix Inc, Gables Holdings Inc, and Colonial Hotel (Grand Bend) Limited.
Allegations in the notice have not been tested in court. The Royal Gazette has tried to contact Mr Hogg to ask if he is opposing the application, but has been unable to reach him.
The OSC said the notice of application has not yet been heard by the Superior Court.
In its notice, the OSC said its enforcement branch is conducting an ongoing investigation into potential contraventions of the Act, including fraud, engaging in the business of trading in securities without registration, and distribution of securities without a prospectus.
It is seeking the continuation of four freeze directions it issued in November to “secure, restrict and prevent the further dissipation of funds, securities and properties” by Mr Hogg, as well as preserving them in the event an enforcement proceeding is commenced before the Commission.
The OSC investigation is looking at the issuance of a crypto asset called “dignity”, allegedly by Cryptobontix, which it said appears to have raised at least $41 million from its sale to investors.
The value of the token was 30 cents in May 2018, but had fallen to 0.08 of a cent by the end of 2019, the notice said.
The Commission said its application seeks to preserve assets held by the respondents. It alleged the funds, securities and properties subject to the freeze directions are “the proceeds of investor funds obtained from the conduct at issue. Alternatively, there is at least a basis to suspect those funds, securities and properties are connected to the conduct at issue”.
Mr Hogg’s connection to Bermuda is through Arbitrade Ltd, which in October 2018 acquired Victoria Hall, on Victoria Street, to be its global headquarters. The building has remained unoccupied.
Mr Hogg created the concept and was an early developer of the project that became Arbitrade, and was a major shareholder and consultant for the company. Cryptobontix was once in majority common ownership with Arbitrade.